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Commissioner of Sales Tax Vs. Mangilal Rameshwar Dayal - Court Judgment

LegalCrystal Citation
SubjectCivil;Sales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 86 of 1962
Judge
Reported in[1964]15STC326(MP)
AppellantCommissioner of Sales Tax
RespondentMangilal Rameshwar Dayal
Appellant AdvocateR.J. Bhave, Government Adv.
Respondent AdvocateNone
Cases ReferredIn Mahadayal Prem Chandra v. Commercial Tax Officer
Excerpt:
.....was concocted piece of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. - 10 he is required to proceed without bias and give sufficient opportunity to the assessee to place his case before him as well as to meet the case made out against him. in other words, he is bound to conduct himself in accordance with the rules of justice, equity and good conscience, even though he may not be compelled to observe all the formalities of a court of law......form no. xxvi. since he had paid only rs. 412 out of rs. 1,238-93, he made in the memorandum of appeal a prayer to the effect that the appeal may be admitted on part payment of the tax due.on 26th march, 1960, the appellate assistant commissioner summarily dismissed the appeal under rule 58(1) on the ground that the full tax had not been paid and the reasons given for payment of a smaller amount of tax were not proper. before that was done, the non-applicant was not heard in support of the reasons given by him for not paying the full amount of tax in respect of which he had filed his appeal. the non-applicant then appealed to the board of revenue which set aside the dismissal of the appeal and remitted the case to the appellate assistant commissioner for giving to the non-applicant a.....
Judgment:

K.L. Pandey, J.

1. Under Section 44(1) of the Madhya Pradesh' General Sales Tax Act, 1958 (hereinafter called the Act), the Board of Revenue has referred to us the following question of law,:

Whether, under Section 38 of the M.P. General. Sales Tax Act, 19.58, read with Rule 58 of the rules thereunder, it is incumbent upon the appellate authority to give an opportunity of hearing to the appellant before summarily rejecting his appeal for non-payment of the full tax assessed that may be due, if a prayer for exemption from such tax had been made by the appellant in the memo of appeal ?

2. On 28th August, 1959, the Sales Tax Officer, Gwalior, assessed the tax payable on sales made by the non-applicant in the year 1957-58 and directed him to pay Rs. 1,238-93 as such tax. Being aggrieved, the non-applicant appealed against the assessment in the prescribed form No. XXVI. Since he had paid only Rs. 412 out of Rs. 1,238-93, he made in the memorandum of appeal a prayer to the effect that the appeal may be admitted on part payment of the tax due.On 26th March, 1960, the Appellate Assistant Commissioner summarily dismissed the appeal under Rule 58(1) on the ground that the full tax had not been paid and the reasons given for payment of a smaller amount of tax were not proper. Before that was done, the non-applicant was not heard in support of the reasons given by him for not paying the full amount of tax in respect of which he had filed his appeal. The non-applicant then appealed to the Board of Revenue which set aside the dismissal of the appeal and remitted the case to the Appellate Assistant Commissioner for giving to the non-applicant a hearing to enable him to substantiate his prayer for not being required to pay the full amount of tax as a pre-condition for entertaining his appeal. Thereupon, at the instance of the Commissioner, the Board referred to us the question stated in the opening paragraph.

3. Rule 58, under which the Appellate Assistant Commissioner dismissed the appeal, is reproduced below :

(1) If the memorandum of appeal or application for revision does not comply with all or any of the requirements of Rule 57 or the appellant fails to pay the tax with penalty, if any, in respect of which the appeal has been preferred or such smaller amount as the appellate authority may direct under the proviso to Sub-section (3) of Section 38, the appeal or application for revision may be summarily rejected :

Provided that no appeal or application for revision shall be summarily rejected under this Sub-rule unless the appellant or applicant is given such opportunity as the appellate or revising authority thinks fit to amend such memorandum of appeal or application for revision so as to bring it into conformity with the requirements of Rule 57.(2) An appeal or application for revision may also be summarily rejected on any other ground which should be reduced to writting by the appellate or revising authority:Provided that before an order summarily rejecting an appeal or application for revision under this Sub-rule is passed, the appellant or applicant shall be given a reasonable opportunity of being heard.

It is obvious, and is also not disputed, that the rule does not specifically require the appellate authority to give to the appellant a reasonable opportunity of being heard before his appeal is dismissed summarily for not paying the full amount of tax in respect of which he has filed his appeal.

4. Section 38(3) of the Act, which deals with the matter, reads:

No first or second appeal against an order of assessment with or without penalty shall be admitted by the appellate authority unless the tax with penalty, if any, in respect of which the appeal has been preferred, has been paid :

Provided that the said authority may, if it deems fit, for reasons to be recorded in writing, entertain an appeal against such order on payment of such smaller amount which shall not be less than one-third of the amount of the tax including penalty, if any, as it may direct.

It is urged on behalf of the Revenue that the proviso gives to the appellate authority a discretion to entertain any appeal on payment of a smaller amount of tax, and, since it is required to give reasons only when it exercises its discretion in favour of the appellant, it need not give reasons for not doing so and may not, therefore, give to the appellant an opportunity of being heard before rejecting his prayer for being permitted to file his appeal on paying a smaller amount of the tax. While we agree that the appellate authority must record its reasons for entertaining an appeal on payment of a lesser amount of the tax, we are further of opinion that, when an appellant claims the benefit of the proviso to Sub-section (3) and prays for being permitted to file his appeal on paying a lesser amount of the tax, the appellate authority has to give to the appellant an opportunity of being heard and it must also record its reasons for rejecting his prayer.

5. Section 35 of the Act gives to the Tribunal, the Commissioner and certain other persons appointed under the Act to assist him certain powers of a court of law. It corresponds to Section 37 of the Income tax Act, 1922. In Dinshaw Darabshaw v. Commissioner of Income-tax (1943) I.L.R. 1943 Bom. 152 at p. 164; 11 I.T.R. 172 Beaumont, C.J., stated :

Although, no doubt, an Income-tax Officer making an assessment is not strictly acting as a court of law, it is clear from Section 37 of the Indian Income-tax Act that he is acting in a quasi-judicial capacity, and he ought to conform to the more elementary rules of judicial procedure.

In In re Harmukhrai Dulichand (1928) I.L.R. 56 Cal. 39 at p. 48 Rankin, C.J., stated :

Fundamentally, no doubt, the Income-tax Officer must proceed in a judicial spirit and come to a judicial conclusion upon properly ascertained facts.

In Gurumukh Singh v. Commissioner of Income-tax, Punjab (1945) I.L.R. 1945 Lah. 173 at p. 203, Din Mohammad, J., with whom three other Judges of the Full Bench agreed, observed :

On giving my full consideration to the different views expressed in the judgments cited above, I am personally inclined to hold that the proceedings taken by the Income-tax Officer under Sub-section (3) of Section 23 cannot be characterised as judicial proceedings as we understand them, but all the same as remarked by me in Ganga Ram Balmokand v. Commissioner of Income-tax, Punjab (1938) I.L.R. 19 Lah. 10 he is required to proceed without bias and give sufficient opportunity to the assessee to place his case before him as well as to meet the case made out against him. In other words, he is bound to conduct himself in accordance with the rules of justice, equity and good conscience, even though he may not be compelled to observe all the formalities of a court of law.

In Suraj Mall Mohta and Co. v. A. V. Visvanatha Saslri [1955] 1 S.C.R. 448 at p. 464, Mahajan, C.J., stated:

Under the provisions of Section 37 of the Indian Income-tax Act, the proceedings before the Income-tax Officer are judicial proceedings and all the incidents of such judicial proceedings have to be observed before the result is arrived at.

In Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal [1955] 1 S.C.R. 941, Mahajan, C.J., observed that, on this subject, the rule of law was faily and rightly stated in Gurumukh Singh's case2 and set aside the decision of the Income-tax Tribunal on the ground that it violated certain fundamental rules of justice and the assessee had not had a fair hearing. In Mahadayal Prem Chandra v. Commercial Tax Officer, Calcutta [1959] S.C.R. 551 the Supreme Court interfered with an assessment made under the Bengal Finance (Sales Tax) Act, 1941, on the ground that the appellants were not given an opportunity to meet the points urged against them and the whole procedure was contrary to natural justice. In view of the authorities noticed above, it must be held that the assessing officers and appellate authorities acting under the Act exercise quasi-judicial functions and their procedure must conform to the rules of natural justice.

6. In the instant case, since'the appellate authority was exercising a quasi function, the rules of natural justice required that the non-applicant should have been given an opportunity of being heard in support of his prayer for being permitted to file his appeal on paying a smaller amount of the tax. This does not however mean that the appellate authority was required to embark upon an elaborate enquiry into the grounds put forward to sustain the prayer. All that it ought to have done was to give to the non-applicant a fair hearing in order to enable him to place his case in support of the prayer. Since an order of summary dismissal grounded on a rejection of such a prayer is appealable, it is obvious that the appellate authority must also give reasons for the course adopted by it.

7. We answer the question referred to us in the manner indicated above. Since the non-applicant did not appear in these proceedings, we make no order about costs.


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